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Quest Diagnostics (DGX) Q2 Earnings Beat Estimates, FY View Up
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Quest Diagnostics Incorporated’s (DGX - Free Report) second-quarter 2023 adjusted earnings per share (EPS) of $2.30 beat the Zacks Consensus Estimate by 3.1%. However, adjusted earnings declined 2.5% from the year-ago adjusted figure.
Certain one-time expenses, like the ones related to amortization expenses, certain restructuring and integration charges, other expenses and excess tax benefits associated with stock-based compensations were excluded from the quarter’s adjusted figures.
GAAP earnings came in at $2.05 per share, up 4.6% from the year-ago reported figure.
Revenues
Reported revenues in the second quarter declined 4.7% year over year to $2.34 billion. However, revenues exceeded the Zacks Consensus Estimate by 4.5%.
Quest Diagnostics Incorporated Price, Consensus and EPS Surprise
Base Business (excludes COVID-19 testing) revenues were $2.30 billion in the reported quarter, up 9.5% year over year. This figure compares with our model’s projection of $2.18 billion for the second quarter.
COVID-19 Testing revenues nosedived 88.3% in the second quarter to $41 million. However, the figure still exceeded our model’s projected revenues of $22.9 million from this segment in the second quarter of 2023.
Diagnostic Information Services revenues in the quarter were down 4.9% on a year-over-year basis to $2.27 billion. This figure compares with our model’s projection of $2.13 billion for the second quarter.
Volumes (measured by the number of requisitions) were up 0.2% year over year in the second quarter. Revenue per requisition declined 4.9% year over year.
Margins
The cost of services during the reported quarter was $1.55 billion, down 4% year over year. The gross profit declined 5.9% to $792 million. The gross margin was 33.9%, reflecting a 45-basis point (bps) contraction from the year-ago figure.
SG&A expenses fell 1.4% to $416 million in the quarter under review. The adjusted operating margin of 16.1% represented a 104-bps contraction year over year.
Cash, Capital Structure and Solvency
Quest Diagnostics exited the second quarter of 2023 with cash and cash equivalents of $126 million compared with $315 million at the end of 2022. The cumulative net cash provided by operating activities at the end of the second quarter was $538 million compared with $882 million in the year-ago period.
Quest Diagnostics updated its full-year 2023 guidance.
Full-year net revenue estimates were raised to a new range of $9.12-$9.22 billion (from the earlier band of $8.93-$9.08 billion). The Zacks Consensus Estimate for the same is pegged at $9.02 billion.
Adjusted EPS is now expected in the range of $8.50-$8.90 (up from the $8.45-$8.95 band earlier). The Zacks Consensus Estimate for the metric is pegged at $8.67.
Our Take
Quest Diagnostics reported better-than-expected earnings and revenues in the second quarter of 2023. Strength demonstrated in the base business is encouraging, reflecting the company’s ongoing efforts to partner with health plans, hospitals and physicians amid a continued return to care.
The company noted the substantial progress made toward improving the profitability of the base business compared to the first quarter and the prior year, which bodes well. DGX’s updated outlook for the full year boosts optimism while operating in a tight labor market.
Meanwhile, year-over-year declines in the top line and earnings are worrisome. COVID-19 testing revenues fell significantly in the reported quarter. A contraction of both margins raises apprehension.
Zacks Rank and Key Picks
Quest Diagnostics currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the broader medical space that have announced quarterly results are Abbott Laboratories (ABT - Free Report) , Elevance Health, Inc. (ELV - Free Report) and Intuitive Surgical, Inc. (ISRG - Free Report) .
Abbott, carrying a Zacks Rank of 2 (Buy), reported a second-quarter 2023 adjusted EPS of $1.08, beating the Zacks Consensus Estimate by 3.8%. Revenues of $9.98 billion outpaced the consensus mark by 2.9%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Abbott has a long-term estimated growth rate of 5.1%. ABT’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 12.4%.
Elevance Health reported a second-quarter 2023 adjusted EPS of $9.04, beating the Zacks Consensus Estimate by 2.5%. Revenues of $43.38 billion surpassed the Zacks Consensus Estimate by 4.5%. It currently carries a Zacks Rank #2.
Elevance Health has a long-term estimated growth rate of 12.1%. ELV’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 2.8%.
Intuitive Surgical reported a second-quarter 2023 adjusted EPS of $1.42, beating the Zacks Consensus Estimate by 7.6%. Revenues of $1.76 billion surpassed the Zacks Consensus Estimate by 1.4%. It currently carries a Zacks Rank #2.
Intuitive Surgical has a long-term estimated growth rate of 14.5%. ISRG’s earnings surpassed estimates in three of the trailing four quarters and missed once, the average surprise being 4.2%.
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Quest Diagnostics (DGX) Q2 Earnings Beat Estimates, FY View Up
Quest Diagnostics Incorporated’s (DGX - Free Report) second-quarter 2023 adjusted earnings per share (EPS) of $2.30 beat the Zacks Consensus Estimate by 3.1%. However, adjusted earnings declined 2.5% from the year-ago adjusted figure.
Certain one-time expenses, like the ones related to amortization expenses, certain restructuring and integration charges, other expenses and excess tax benefits associated with stock-based compensations were excluded from the quarter’s adjusted figures.
GAAP earnings came in at $2.05 per share, up 4.6% from the year-ago reported figure.
Revenues
Reported revenues in the second quarter declined 4.7% year over year to $2.34 billion. However, revenues exceeded the Zacks Consensus Estimate by 4.5%.
Quest Diagnostics Incorporated Price, Consensus and EPS Surprise
Quest Diagnostics Incorporated price-consensus-eps-surprise-chart | Quest Diagnostics Incorporated Quote
Quarterly Details
Base Business (excludes COVID-19 testing) revenues were $2.30 billion in the reported quarter, up 9.5% year over year. This figure compares with our model’s projection of $2.18 billion for the second quarter.
COVID-19 Testing revenues nosedived 88.3% in the second quarter to $41 million. However, the figure still exceeded our model’s projected revenues of $22.9 million from this segment in the second quarter of 2023.
Diagnostic Information Services revenues in the quarter were down 4.9% on a year-over-year basis to $2.27 billion. This figure compares with our model’s projection of $2.13 billion for the second quarter.
Volumes (measured by the number of requisitions) were up 0.2% year over year in the second quarter. Revenue per requisition declined 4.9% year over year.
Margins
The cost of services during the reported quarter was $1.55 billion, down 4% year over year. The gross profit declined 5.9% to $792 million. The gross margin was 33.9%, reflecting a 45-basis point (bps) contraction from the year-ago figure.
SG&A expenses fell 1.4% to $416 million in the quarter under review. The adjusted operating margin of 16.1% represented a 104-bps contraction year over year.
Cash, Capital Structure and Solvency
Quest Diagnostics exited the second quarter of 2023 with cash and cash equivalents of $126 million compared with $315 million at the end of 2022. The cumulative net cash provided by operating activities at the end of the second quarter was $538 million compared with $882 million in the year-ago period.
The company has a five-year annualized dividend growth rate of 7.25%.
Guidance
Quest Diagnostics updated its full-year 2023 guidance.
Full-year net revenue estimates were raised to a new range of $9.12-$9.22 billion (from the earlier band of $8.93-$9.08 billion). The Zacks Consensus Estimate for the same is pegged at $9.02 billion.
Adjusted EPS is now expected in the range of $8.50-$8.90 (up from the $8.45-$8.95 band earlier). The Zacks Consensus Estimate for the metric is pegged at $8.67.
Our Take
Quest Diagnostics reported better-than-expected earnings and revenues in the second quarter of 2023. Strength demonstrated in the base business is encouraging, reflecting the company’s ongoing efforts to partner with health plans, hospitals and physicians amid a continued return to care.
The company noted the substantial progress made toward improving the profitability of the base business compared to the first quarter and the prior year, which bodes well. DGX’s updated outlook for the full year boosts optimism while operating in a tight labor market.
Meanwhile, year-over-year declines in the top line and earnings are worrisome. COVID-19 testing revenues fell significantly in the reported quarter. A contraction of both margins raises apprehension.
Zacks Rank and Key Picks
Quest Diagnostics currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the broader medical space that have announced quarterly results are Abbott Laboratories (ABT - Free Report) , Elevance Health, Inc. (ELV - Free Report) and Intuitive Surgical, Inc. (ISRG - Free Report) .
Abbott, carrying a Zacks Rank of 2 (Buy), reported a second-quarter 2023 adjusted EPS of $1.08, beating the Zacks Consensus Estimate by 3.8%. Revenues of $9.98 billion outpaced the consensus mark by 2.9%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Abbott has a long-term estimated growth rate of 5.1%. ABT’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 12.4%.
Elevance Health reported a second-quarter 2023 adjusted EPS of $9.04, beating the Zacks Consensus Estimate by 2.5%. Revenues of $43.38 billion surpassed the Zacks Consensus Estimate by 4.5%. It currently carries a Zacks Rank #2.
Elevance Health has a long-term estimated growth rate of 12.1%. ELV’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 2.8%.
Intuitive Surgical reported a second-quarter 2023 adjusted EPS of $1.42, beating the Zacks Consensus Estimate by 7.6%. Revenues of $1.76 billion surpassed the Zacks Consensus Estimate by 1.4%. It currently carries a Zacks Rank #2.
Intuitive Surgical has a long-term estimated growth rate of 14.5%. ISRG’s earnings surpassed estimates in three of the trailing four quarters and missed once, the average surprise being 4.2%.